● Covered by 1 source · 1 reportHigh impact1 negative
Lumentum CEO warns of critical indium phosphide shortage for AI data centers
Key points
- Indium phosphide supply lags 30% behind customer needs.
- Nvidia provided $2 billion to Lumentum and Coherent for capacity.
- Indium phosphide lasers are crucial for all silicon photonics platforms.
- Co-packaged optics increase demand for high-power continuous-wave lasers.
Impending Indium Phosphide Shortage
Lumentum CEO Michael Hurlston announced at the RAISE Summit in Paris that indium phosphide, a compound semiconductor vital for lasers in AI data centers, is facing a significant supply squeeze. He compared the impending shortage to past issues with DRAM and NAND, indicating a severe bottleneck for the industry.
Surging Demand from Hyperscalers
Hurlston noted that while traditional telecom customers purchased lasers in the hundreds, hyperscalers like Nvidia now require hundreds of millions. Despite Lumentum operating five indium phosphide fabs, current shipments are more than 30% below customer demand. This surge is primarily due to the rapid adoption of co-packaged optics in AI infrastructure.
Nvidia's Strategic Investment
In response to this supply challenge, Nvidia issued $2 billion checks to Lumentum and Coherent in March. These investments include purchase commitments and access to future capacity, aiming to secure the necessary components for their silicon photonics platforms. Both Lumentum and Coherent are major suppliers of high-speed datacom lasers.
Indium Phosphide's Role in Silicon Photonics
Indium phosphide is critical because it has a direct bandgap, allowing it to efficiently convert electrical current into photons. Silicon, with its indirect bandgap, can guide and modulate light but cannot generate it. Therefore, every silicon photonics platform, including those from Nvidia, Broadcom, Marvell, and Cisco, relies on an indium phosphide laser to provide the light source.
Impact of Co-Packaged Optics
The shift from pluggable transceivers to co-packaged optics, while offering benefits like improved power efficiency and network resiliency, does not eliminate the need for indium phosphide lasers. Co-packaging also drives demand for more complex, high-power continuous-wave lasers and external laser modules that feed multiple channels, which are more challenging to manufacture than conventional electro-absorption modulated lasers.
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Reporting from
Lumentum CEO Michael Hurlston stated that indium phosphide, a material essential for lasers in AI data centers, faces a severe supply shortage, with current production 30% below customer demand. This bottleneck is driven by the skyrocketing demand for co-packaged optics from companies like Nvidia, which has invested in Lumentum and Coherent to secure future capacity.